"The reduction in mortgage arrears and repossessions is welcome, but affordability remains a challenge for many across the housing market."
- Ian Harris - Propertymark
Buy-to-let mortgage arrears have fallen by 6% quarter-on-quarter in Q2 2026, with 8,390 in arrears of 2.5% or more of the outstanding balance, according to the latest data from UK Finance.
There were 2,980 BTL mortgages in the lightest arrears band, representing between 2.5 and 5% of the outstanding balance, 7% lower than the previous quarter.
Mortgages in arrears accounted for 0.44 per cent of all buy-to-let (BTL) mortgages outstanding in the second quarter of 2026.
In the same quarter, 630 buy-to-let mortgaged properties were taken into possession, 22% fewer than in Q1.
"The number of mortgages in arrears is falling for both residential and buy-to-let mortgages - and possessions are also down year-on-year for the first time since late 2003 and remain significantly below the long-term historic average," James Tatch, head of analytics at UK Finance, said.
"If you are concerned about meeting repayments, the first port of call is always to speak to your lender, who stand ready to offer tailored help available."
Ian Harris, NAEA Propertymark president, said: "Whilst these figures are encouraging, it is important not to lose sight of the financial pressures that continue to affect homeowners and landlords. The reduction in mortgage arrears and repossessions is welcome, but affordability remains a challenge for many across the housing market.
"Early engagement is key to helping those facing financial difficulty, providing an opportunity to explore the support and options available before circumstances become more difficult to resolve. This is particularly important for landlords, where financial pressures can also have wider implications for the availability of homes in the private rented sector.
"With the majority of possessions relating to older mortgages, continued collaboration between lenders, agents and policymakers will be important in supporting those at risk and maintaining confidence and stability across the housing market."
Mark Harris, chief executive of SPF Private Clients, commented: "Despite significant pressure on household finances, the number of mortgages in arrears and homes repossessed fell in the second quarter of the year.
"Despite rising mortgage rates on the back of the Middle East conflict, the downward trend in arrears and possessions continues. While further rate reductions had been forecast at the start of the year, the Bank of England’s decision to hold base rate at 3.75 per cent for five consecutive meetings has contributed to stability and a steadiness which is assisting borrowers with affordability.
"The figures also indicate that lenders continue to show forbearance and are working with borrowers to try and find a solution when the latter find themselves in difficulty. For a lender to take repossession of a property really is the last resort - they would much prefer an open dialogue way in advance of this needing to happen.
"There may be options open to the borrower, whether it is just a blip or a longer-term issue, such as a payment holiday, switching to interest-only for a while or extending the mortgage term. However, it is important that this conversation is started sooner rather than later and that borrowers don’t ignore the problem, as that will only make matters worse."
Melanie Spencer, growth director at Target Group, added: "A further fall in mortgage arrears suggests that despite the financial pressures households have faced in recent years, mortgage borrowers are managing to stay in the black.
"Meanwhile, lenders continue to ensure that any mortgage distress remains contained, highlighting their good work on early intervention and forbearance. While positive, it’s important to view these latest figures against an economic backdrop that remains complex and difficult to predict.
"The UK economy has so far managed to fare reasonably well in light of the conflict in the Middle East, as evidenced once again by this morning’s resilient GDP data. The likes of energy price pressures and shipping disruption pose a real threat to inflation, interest rate expectations and to mortgage pricing.
"Even with the base rate remaining unchanged, we have seen movements in swap rates and lender funding costs influence the rates available to borrowers, a picture that could yet move further and affect those approaching the end of fixed-rate deals.
"As a result, falling arrears shouldn’t mean complacency. There’s no question that borrowers will continue to be tested as they come to refinance, and lenders need to be ready to identify and support those customers as soon as their circumstances change. While possessions have declined in this quarter, lenders still need to be alive to this challenge too, managing these cases effectively and sensitively."
